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CCCTB – Dead on Arrival?

17 May 2011

On 16 March 2011, the European Commission published its proposal (full text available as a pdf here) to introduce a common consolidated corporate tax base (CCCTB).

We outlined the main components of the proposal and the controversy surrounding the proposition back in March. The basic idea consists of reducing the administrative burden on cross-border companies by creating an optional single tax system so that companies operating in more than one Member State can pay corporate taxes on their profits once, rather than in each of the Member States in which they operate. For example, a large company with operations in France, Ireland, Germany and the Poland would be able to choose whether to pay its taxes under the CCCTB – the common system – or continue paying its taxes under the French, Irish, German and Polish systems. The taxes, if paid under the CCCTB, would then be distributed to the Member States concerned.

While the common system is designed to be optional, meaning companies are free to choose whether to use it or not, countries with low corporate tax rates are concerned that the proposal would dissuade large multinational companies from setting up shop in their country, as a common ‘blended’ corporate tax rate would presumably be higher than the lower rate offered by the individual Member State’s tax system. The Irish subsidiary of accounting firm PwC has produced a note stating its main arguments against CCCTB here. Furthermore, former Commissioner for the Internal Market Charlie McCreevy has previously argued that 'optionality is not workable', and is likely to be a step on the path towards an obligatory system.

The common system does not enjoy unanimous support from companies, but it has even less support among the EU Member States. Germany is the latest Member State to voice its opposition to the proposal, which is now highly unlikely to get off the ground in its current state given the growing opposition of national governments (see below).

In any case, the current draft directive proposed by the Commission is more likely to serve as a starting point for negotiations among the Member States, which may also include moves to improve cooperation between national tax regimes, as proposed by Germany, or more ambitious proposals such as creating an EU-wide tax on bank balance sheets, suggested by the Swedish government. Unless the parameters of the negotiations are tightly controlled by the Council Presidency (currently held by Hungary before handing over to Poland in July), the CCCTB risks being subsumed into a much wider conversation about European tax coordination and cooperation.

The Commission hopes to introduce the CCCTB on the basis of Article 115 TFEU, which reads (emphasis added):

Article 115

Without prejudice to Article 114, the Council shall, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, issue directives for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the internal market.

This means two things:

(1) Any Member State has the ability to veto this project. While choosing to do so may result in a significant expenditure of political capital, there is no legal obstacle to one country opposing the introduction of CCCTB. 

(2) The European Parliament is only “consulted” in this process, meaning that it does not have the power to approve or reject the proposal outright, although it can play a role in shaping its final parameters.

With Member States such as Ireland strongly opposed to the introduction of CCCTB, the current Commission draft seems destined for a veto in the Council. 

Another way of introducing CCCTB is on the basis of ‘enhanced cooperation’ among a group of at least nine Member States. Enhanced cooperation has been used already in the case of cross-border divorce proceedings. There are, however, a number of administrative and substantive conditions before enhanced cooperation may be initiated, including:

· It may only be used as a “last resort”, meaning other options must be exhausted (a veto by one or several Member States against the CCCTB proposal would likely satisfy this requirement).

· It must not constitute “a barrier to or discrimination in trade between Member States, nor shall it distort competition between them”.

· Administrative costs resulting from the enhanced cooperation shall be borne by the Member States participating therein.

· Enhanced cooperation must be agreed by the Council, acting by QMV, and with the consent of the European Parliament.

It is likely that at least nine Member States would be able to agree on a CCCTB model. The other substantive requirement that the enhanced cooperation must not distort trade or competition in the EU internal market is likely to constitute a significant obstacle to CCCTB between a group of Member States, and Member States opposed to CCCTB may be expected to argue strongly that a CCCTB between a group of Member States would breach this requirement.

Finally, the decision to authorise enhanced cooperation is taken by the European Parliament and the Council. In the latter, a qualified majority of Member States is required. Based on the results from the table below, even if the Member States listed in the ‘unknown/no position’ column are included as being in favour, the vote would not pass. You can run various simulations for yourself using this QMV calculator

Current known/likely positions of Member States on CCCTB

For/leaning in favour

Unknown/no position

Against/leaning against


Czech Republic

























United Kingdom

N.B. – for most of the countries above, support/opposition to CCCTB is not set in stone and positions may change during negotiations in the Council


Further reading: 

·      The European Commission’s resource page for CCCTB.

·      Ernst & Young have a dedicated page for updates on the CCCTB.

·      Bulgarian Deputy Prime Minister and Minister for Finance, Simeon Djankov, gave an address to the IIEA on this topic recently.


This content forms part of the E View project, which is part-funded by DG Communication of the European Parliament. 


As an independent forum, the Institute does not express any opinions of its own. The views expressed in the article are the sole responsibility of the author.


Posted in: E View Project | 1 comment

Comments 1-1 of 1

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Eva says: 09 Jun 2011 7:37

Congratulations! Excellent summary of the CCCTB and Council positions.

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